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Wilmington Announces 2013 Third Quarter Results

TORONTO, ONTARIO--(Marketwired - Nov. 12, 2013) - Wilmington Capital Management Inc. ("Wilmington" or the "Corporation") (TSX:WCM.A)(TSX:WCM.B) reported net income attributable to shareholders for the three months ended September 30, 2013 of $358,000 or $0.04 per share compared to a net loss of $123,000 or $(0.01) per share for the same period in 2012. For the nine months ended September 30, 2013, the Corporation generated a net income attributable to shareholders of $260,000 or $0.03 per share compared to a net loss of $586,000 or $(0.07) per share for the same period last year.

To view a full copy of the Corporation's unaudited condensed financial results for the period ended September 30, 2013 including the Corporation's unaudited condensed interim consolidated financial statements and accompanying MD&A, please refer to the SEDAR website www.sedar.com.

THIRD QUARTER 2013 HIGHLIGHTS

During the third quarter, the Corporation took further steps to solidify and build upon the foundation of its three operating platforms - self storage facilities, private equity funds and natural gas assets.

In July 2013, Wilmington invested $2.2 million to acquire a 36.5% ownership interest in Northpoint Resources Ltd. ("Northpoint"), a privately held natural gas producer with assets in the Altares region of Northeastern British Columbia. Northpoint produced 7,050 mcf/d (1,175 boe/d) during the third quarter and has proven plus probable reserves of 7,605 Mboe (45,630 Mmcfe).

In addition, the Corporation completed the divesture of its non-core assets with the sale of its commercial land in San Francisco, California, for cash proceeds of USD $983,000, the transfer of the USD $19 million secured debt and the settlement of certain loans payable.

As at September 30, 2013, Wilmington had assets under management in its operating platforms of approximately $138 million ($55 million representing Wilmington's share).

OPERATIONS REVIEW

Wilmington continues to execute it principal objectives of making investments capable of generating appreciation in value as opposed to current income and to maximize shareholder returns by investing its own capital alongside partners and co-investors in hard assets and private equity funds. These assets are managed through the Corporation's operating platforms where Wilmington can add scale and improve valuations.

Storage Facilities

Real Storage Private Trust ("Trust")

The Trust (44.78% owned) owns 20 self-storage facilities comprising 787,000 square feet of rentable area and one development property. The Trust recorded significant improvements in 2013 as the facilities in Western Canada, which were for the most part in the initial lease up stage, achieved stabilized occupancy levels. During the third quarter of 2013, same store occupancy levels averaged 85%, compared to 81% in 2012; same store operating margins for Q3 2013 of 60% compared to Q3 2012 margins of 56%.

During the third quarter, the Trust commenced quarterly distributions to its unitholders equivalent to 3% per annum on invested capital. The distribution for the third quarter was $168,000 (Corporation's share - $75,000).

Private Equity

Network Capital Management Inc. ("NCI") and Network 2012 Fund

NCI (50% owned) has funds under management now totaling approximately $37 million and the majority of Network's available capital has been successfully deployed in a strong mix of junior oil and gas and service companies. Wilmington invested $8 million of capital in the Network 2012 Fund.

Natural Gas Assets

Shackleton 2011 Limited Partnership (the "Shackleton Partnership")

The natural gas assets owned through the Shackleton Partnership (59% owned) have proven to be of high quality and present good opportunities for growth and future development once we reach a more favorable natural gas pricing environment. The weighted average price realized during the three months ended September 30, 2013 was $2.84 per mcf and operating netbacks averaged $1.41 per mcf (realized price of $2.28 per mcf and netbacks of $1.03 per mcf for the comparable period in 2012). Natural gas production volumes for the 100% interest in the Shackleton field amounted to 4,139 mcf/d (690 boe/d). Of its 2013 production, approximately 50% has been hedged under fixed price contracts with an average price of $3.35 per mcf.

Northpoint Resources Ltd. ("Northpoint")

On July 30, 2013, the Corporation grew its natural gas platform by investing in Northpoint, a privately held oil and gas producer with assets in the Altares region of northeastern British Columbia. Northpoint's production during Q3 2013 was 1,175 boe/d and has total proved plus probable reserves totaling approximately 45,630 Mmcfe (7,605 Mboe). The Corporation acquired a 36.5% ownership interest in Northpoint for total cash consideration of $2.2 million. In addition and as part of an overall recapitalization plan, Wilmington acquired $0.8 million of a 10%, $5 million debenture issue in Northpoint which matures on August 1, 2017. Northpoint is professionally managed by an experienced executive team. As part of the transaction, the Corporation is entitled to nominate three of the seven directors to the Northpoint board.

Discontinued Operations

On July 31, 2013, the Corporation completed the sale of its interests in commercial land in San Francisco, California. The Corporation received total proceeds of USD $20.0 million comprised of cash proceeds of USD $983,000 and the transfer of the secured debt of USD $19.0 million to the purchaser. Cash proceeds from the sale were used to settle certain loans payable. The sale was part of the steps in rationalizing the Corporation's core business.

Outlook

2012 and 2013 have been formative years and the Corporation believes that the foundation for achieving future growth through its three operating platforms - self storage, private equity and oil and natural gas - is now in place. In the years ahead, the Corporation expects to add scale to these operating platforms, improve valuations and earn attractive cash flow and total returns for shareholders.

FINANCIAL RESULTS

CONSOLIDATED INTERIM STATEMENTS OF INCOME (LOSS)

Unaudited

Three months ended September 30,

Nine months ended September 30,

(CDN $ Thousands, except per share amounts)

2013

2012

2013

2012

Income

Natural gas sales

1,083

1,031

3,640

3,095

Royalties

(163

)

(191

)

(581

)

(553

)

Natural gas revenue

920

840

3,059

2,542

Investment and other income

25

76

214

193

Foreign exchange gain

18

36

---

42

963

952

3,273

2,777

Expenses

Petroleum operations

385

393

1,077

1,371

General and administrative

344

190

999

776

Depletion, depreciation and amortization

378

368

1,123

1,209

Stock based compensation

33

57

125

139

Foreign exchange loss

---

---

99

---

1,140

1,008

3,423

3,495

Operating loss

(177

)

(56

)

(150

)

(718

)

Finance costs

71

88

238

250

Loss before share of equity accounted investments, investment revaluation and income taxes

(248

)

(144

)

(388

)

(968

)

Share of net income from Real Storage Private Trust

201

91

268

138

Share of net loss from Network Capital Management Inc.

(5

)

(12

)

(59

)

(16

)

Loss on revaluation of investment Network Capital Management Inc.

(1,584

)

---

(1,584

)

---

Share of net loss from Network 2012 Fund

(37

)

(5

)

(114

)

(108

)

Share of net loss from Northpoint Resources

(240

)

---

(240

)

---

Loss before income taxes from continuing operations

(1,913

)

(70

)

(2,117

)

(954

)

Income tax benefit

119

45

89

277

Net loss from continuing operations

(1,794

)

(25

)

(2,028

)

(677

)

Income from discontinued operations, net of tax

2,355

14

2,579

6

Net income (loss)

561

(11

)

551

(671

)

Net income (loss) attributable to:

Owners of the Corporation

358

(123

)

260

(586

)

Non-controlling interest

203

112

291

(85

)

561

(11

)

551

(671

)

Net loss per share from continuing operations

Basic

(0.23

)

(0.02

)

(0.27

)

(0.07

)

Diluted

(0.23

)

(0.02

)

(0.27

)

(0.07

)

Net income (loss) per share

Basic

0.04

(0.01

)

0.03

(0.07

)

Diluted

0.04

(0.01

)

0.03

(0.07

)

CONSOLIDATED INTERIM BALANCE SHEET

Unaudited
(CDN $ Thousands)

September 30,
2013

December 31,
2012

Assets

Non-current assets

Investment in Real Storage Private Trust

9,999

7,271

Investment in Network Capital Management Inc.

69

1,712

Investment in Network 2012 Fund

7,876

7,554

Investment in Northpoint Resources Ltd.

1,940

---

Northpoint Debenture

798

---

Natural gas property, plant and equipment

16,972

17,840

Deferred income taxes

287

---

37,941

34,377

Current assets

Income taxes

---

435

Receivables and other assets

622

885

Cash and cash equivalents

1,448

6,601

2,070

7,921

Assets held for sale

---

18,541

2,070

26,462

Total assets

40,011

60,839

Liabilities

Non-current liabilities

Asset retirement obligations

784

750

Deferred tax liabilities

285

259

1,069

1,009

Current liabilities

Accounts payable and accrued liabilities

1,117

1,024

Revolving loan facility

5,300

6,700

Income taxes payable

821

---

7,238

7,724

Liabilities held for sale

---

21,432

7,238

29,156

Total liabilities

8,307

30,165

Equity

Shareholders' equity

27,599

26,860

Non-controlling interest

4,105

3,814

Total equity

31,704

30,674

Total liabilities and equity

40,011

60,839

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Unaudited

Three months ended September 30,

Nine months ended September 30,

(CDN $ Thousands)

2013

2012

2013

2012

Net income (loss)

561

(11

)

551

(671

)

Items that may subsequently be reclassified to net income or loss

Share of other comprehensive income (loss) from Network 2012 Fund

257

(99

)

435

(380

)

Deferred income taxes (benefit) on above items

(44

)

48

(67

)

48

Other comprehensive income (loss) from continuing operations

213

(51

)

368

(332

)

Items that may subsequently be reclassified to net income or loss

Other comprehensive loss from discontinued operations, net of tax

(50

)

(24

)

(14

)

(29

)

Total other comprehensive income (loss)

163

(75

)

354

(361

)

Comprehensive income (loss)

724

(86

)

905

(1,032

)

Comprehensive income (loss) attributable to:

Owners of the Corporation

521

(198

)

614

(947

)

Non-controlling interest

203

112

291

(85

)

724

(86

)

905

(1,032

)

Executive Officers of the Corporation will be available at 403-800-0869 to answer any questions on the Corporation's financial results.

This news release contains forward-looking statements concerning the Corporation's business and operations. The Corporation cautions that, by their nature, forward-looking statements involve risk and uncertainty and the Corporation's actual results could differ materially from those expressed or implied in such statements. Reference should be made to the most recent Annual Information Form for a description of the major risk factors.